Where do billions in aid and loans given to Jordan go?
Jordan’s budget has historically heavily relied on aid, grants, and concessional loans to cover its capital expenditures and public debt servicing. According to data from the Jordanian Ministry of Planning, the amount of aid and loans committed to Jordan in the past year alone was four billion dollars.
This approach considered by opponents as "rentier" is seen as the root cause of the current economic crisis. In a statement by the former deputy Prime Minister and Minister of Planning and International Cooperation, Dr. Marwan Al-Muasher, under the title "Deep-Rooted Crisis" he argues that the current economic situation is a result of the accumulation of a "rentier" economic and political approach that relied heavily on external aid and neglecting the building of a self-reliant, efficient, and productive economic system.
This official financial policy, is reliant on aid in spending on vital sectors, The decline of this aid, led to a decline in the quality of public services provided to Jordanians, such as education, health, and transportation because of the decrease in capital spending for current expenses.
According to social and economic researcher, Laith Al-Ajlouni, "public health indicators in Jordan show a deterioration in the health of Jordanians. Almost 51% of Jordanians above the age of 50 suffer from diabetes, and about one third of Jordan's children suffer from anemia, in addition to 43% of women aged 15-49 suffer from anemia."
Ajlouni also says that "52% of students at the age of 10 in Jordan suffer from 'learning poverty'", meaning that "52% of children at the age of 10 cannot read and comprehend simple text at the end of primary school, and this rate is higher than the average of learning poverty in the region (48%)."
"The heavy reliance of the Jordanian state on foreign aid has in turn led to the inability of the state to sustain necessary resources for spending, and thus the need for financial reform programs that entail the removal of support for some goods and public services and raising taxes and decreasing public spending."
Based on the budget analysis
The foreign aid for Jordan reached approximately 802 million dinars in 2023, compared to 796 million dinars in 2022.
The total general revenues in the budget of 2023 is 9,569 million dinars, which represents an increase of approximately 835 million dinars, or 9.6% compared to its level in 2022.
American aid constitutes the largest share of foreign aid provided to the Kingdom since its establishment. This report tries to analyze the data of the Jordanian budget and the reports of foreign aid provided by the Ministry of Planning, regarding the size of these aids and transparency in spending them.
According to the website of the American Embassy in Amman, the United States has been providing financial assistance to Jordan for over 70 years to ensure what it calls "the prosperity and stability of all Jordanians." Since 1951, America has provided more than 20 billion dollars in aid to Jordan.
Recently, the United States renewed the fourth Memorandum of Understanding and extended it for seven years, increasing assistance from 1.275 billion dollars to 1.450 billion dollars.
According to the data analyzed by "Amman Net", the aid was distributed among various sectors, including direct support to the treasury. In the field of security, the United States provided Jordan with 12 Black Hawk helicopters, and since 1987, the US government's assistance program for countering terrorism has trained more than 7,150 Jordanian police officers.
The United States also supported Jordan with 3.75 billion dollars as a guarantee for loans, which will provide Jordan with over 600 million dollars in interest rates over the next five years and will also help to lower the local interest rate and assist in promoting economic growth.
According to the Congressional Research Center, the majority of this aid, around 1.2 billion dollars, goes towards economic assistance, while the remaining amount is allocated as military aid.
“Despite the large amounts of foreign aid received by Jordan, the country still suffers from a high overall unemployment rate of 22.6%, a public debt that is around 110% of the country's GDP, and around 27% of the population living in poverty.” Laith Al-Ajlouni is a social and economic researcher.
“In addition to that, data from opinion polls shows that there is a high level of dissatisfaction among Jordanians, with 70% believing that their country is ruled for the benefit of a small elite.”
The Jordanian budget included about 1,157 million dinars in allocations for the Ministry of Health, an increase of 95 million dinars or 9% compared to 2022. Additionally, education allocations also increased by 8.1% in 2023, totaling around 1,363 million dinars, an increase of 111 million dinars over 2022.
According to figures from the Ministry of Planning, the social protection sector received the most of these aid, accounting for 45.7% of the total, followed by the economic development sector at 32.7%, the employment and labor sector at 8.7%, the infrastructure sector at 7.6% and agriculture and food security at 2.5%. The remaining percentages were distributed among other sectors.
Fakhr Daas, the coordinator of the "Thabahtuna" campaign to defend students' rights, states that there has been a decline in education and health allocations, as examples he mentioned returning to rented schools and the two-shift system, and the use of additional teachers, which is a result of a decrease in spending on education, which affects the quality of service.
"As for higher education, despite an increase in the number of students, the government is reducing government support for universities and giving the green light for universities to raise tuition fees to compensate for the reduction in spending."
In regards to the health sector, Dr. Ahmed Al-Shunaq, the Secretary General of the National Democratic Party, stresses that the budget of the Ministry of Health has decreased over the past seven years, despite the population increase in the kingdom of more than 25%.
Assistance and taxes
The author of the book "The Financial and Economic Crisis in Jordan," states that the state's budget over the past five years has relied heavily on indirect taxes in addition to direct taxes, aid, and loans.
According to economist Fahmi Al Katut relying on aid to cover government spending is a reflection of a lack of investment in the country's resources. Foreign aid is one of the forms of political and economic dependence, and it is unpredictable. It should be directed towards development projects that contribute to building a national economy that puts the country on a new stage, focusing on self-reliance, not draining it through current expenses and expanding government spending, which becomes a burden on the state after its decline.
Instead of adapting to current developments, the author argues that the government has continued to follow a policy of expanding spending financed by loans, which has led to the country becoming overwhelmed by debt. At the same time, support for basic goods and services such as health and education has decreased. Despite this, the stated goals of economic policies, such as reducing budget deficits and limiting debt, have not been achieved.
The author believes that the Jordanian economy has become more distorted, as it combines a welfare model in terms of employment and benefits, on the one hand, and reliance on aid and loans to provide a third of the state's expenditure and the transfer of Jordanian expatriates abroad to cover part of the import bill on the other hand.
It is not limited to American aid, as Jordan also receives a package from Britain worth 650 million pounds Sterling (612 million Jordanian dinars) for a period of 5 years, and Britain has also announced that it will guarantee a loan to Jordan from the International Bank worth 250 million dollars.
At the same time, the value of German aid to Jordan was 413.9 million euros for the years 2022-2023, while the amount of development aid provided by Japan to Jordan since 1974 and until the end of 2022 reached 4 billion dollars in the form of loans, grants and technical cooperation in various economic and service sectors.
Data from the Saudi aid platform, affiliated with the King Salman Center for Relief and Humanitarian Action, also showed the value of humanitarian aid provided to the Kingdom since 1978.
The data indicates that the total value of the assistance provided reached 1.74,735,500 and was distributed over 76 projects.
Where does this grant go?
This large amount of aid that the Jordanian economy receives raises a question that has been raised by Jordanian protesters in their sit-ins, "Where does this aid go?" This question was most recently raised by MP Mohammad Al-Fayez, who was dismissed from parliament last Wednesday.
Al-Fayez sent a letter to the Crown Prince of Saudi Arabia, Mohammad bin Salman, asking him not to send aid to Jordan, so that "the pockets of corruption and corrupt people" would not benefit from it.
In his letter, sent in December, Al-Fayez said: "We do not want aid or donations, our country is full of blessings, our dear Jordan refuses to tarnish our dignity by being called a nation of beggars."
Member of Parliament Jafar Al-Raba'ih, head of the committee for parliamentary conduct, said that "the letter of Muhammad Al-Fayez to the Saudi Arabian Kingdom regarding aid and his absence from the parliament for a year and receiving a salary despite his absence were the reasons for his dismissal from the parliament."
In his opinion, deputy Muhammad Abu Sa'ileek believes that "the question of where the aid goes is a puzzle that previous parliamentary committees were unable to answer, as some of the projects related to this aid are directly implemented by the donors."
Regarding the dismissal of deputy Muhammad Al-Fayez and the accusations against him, the deputy said, MP Muhammad Al-Fayez made a mistake on one hand and the parliament also made a mistake on the other hand, as the deputy exceeded the boundaries by addressing the heads of states, which should have been done through official channels."
"As for the parliament, it made a mistake when it imposed a penalty that did not correspond to what Al-Fayez did, the deputy has a role of oversight, he can direct a question to the government about aid and its spending methods, but many questions are not answered, there is a constant delay from the government, what Al-Fayez did is the right of the deputy to monitor and hold accountable."
Loans outweigh grants
The expert economist Muhammad Al-Bashir emphasizes that the loans that are accumulated annually on the kingdom outweigh the grants and aid because of the increasing deficit in the budget, and this affects the current expenditure and debt services which have reached 1.7 billion dinars, compared to 250 million dinars 20 years ago.
He also said that these funds are spent on plugging budget deficits and on paying off debt interest.
Economic expert Mohammed Al-Bashir believes that Jordan has entered into a cycle of debt, where it takes on new loans to pay off old ones, and there is no solution to the structural problem in the Jordanian economy, which has lost its inputs from institutions that were dedicated to it, leading the government to impose tax laws on citizens and hindering the economy from growing.
He also states that a part of the American aid goes to the military and a part enters the budget, but there are other countries that provide aid that does not enter the budget, such as the Syrian refugee aid file. He also mentions that there were popular demands for all aid to enter the budget and that the lack of accountability is where the problem lies.
Government: Aid is controlled
The Jordanian Minister of Planning and International Cooperation, Zainab Touqan, emphasized during a meeting with the Financial Committee in the House of Representatives last week that "all aid and grants are handled by the specialized agencies, with strict oversight and monitoring from the donor agencies."
"The Ministry has prepared its report on the foreign aid committed to Jordan for 2022, and it will be ready next week and will be published on the Ministry's website," according to the minister.
Touqan said, "aid in general has different categorizations under grants, including support for general budget and grants for development projects and programs, as well as soft loans, which are very favorable financing conditions and not commercial conditions with an interest rate that usually ranges from 2-4% and repayment periods of 30-35 years depending on the lender."
The message sent by the deputy Muhammad Al-Fayez to the Saudi Crown Prince Mohammad bin Salman, requesting that no aid be provided to Jordan because it goes to corrupt individuals, led to his dismissal from the parliament on Wednesday. However, it raises a common question among the public, where does the aid go and why does the citizen not see any impact from it.